Saving “Money” That is Losing Value
It’s no secret that the value of our currency decreases in value over time (inflation); but why do so many store money as if it provides some sense of security? It’s like building a house on sand; eventually the ground will erode from underneath it. The house isn’t bad, but the ground on which it was built isn’t the proper place to put the house. There is nothing wrong about saving, but keeping large amounts of cash, more than is needed within a few weeks or months, destroys financial security and value over time.
According to a Business Insider article written in 2016:
Unbiased private-sector efforts to calculate the real rate of inflation have yielded a rate of around 7% to 13% per year, depending on the locale — many multiples of the official rate of around 1% per year.(https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8)
But what is the biblical perspective of saving money? Jesus addressed the value of money versus more valuable things:
Matthew 22:17–21 ESV — Tell us, then, what you think. Is it lawful to pay taxes to Caesar, or not?” But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? Show me the coin for the tax.” And they brought him a denarius. And Jesus said to them, “Whose likeness and inscription is this?” They said, “Caesar’s.” Then he said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.”
Jesus knew that individuals cannot control the actual money because it isn’t ours. He teaches us that there are more valuable things to be concerned about. If we seek things that are valuable, the currency that is used to transfer their value won’t matter. (See my other blog post about money: “IT’S MY MONEY!… Is it?”)
There is also the issue of storing excessive reserves that are not working for the owner. We typically store cash in bank accounts that produce less interest than the inflation of the currency. The desire to hoard excessive cash without putting it to work out of fear was specifically addresses by Jesus in his Parable of the Minas:
Luke 19:20 Then another came, saying, ‘Lord, here is your mina, which I kept laid away in a handkerchief; 21 for I was afraid of you, because you are a severe man. You take what you did not deposit, and reap what you did not sow.’ 22 He said to him, ‘I will condemn you with your own words, you wicked servant! You knew that I was a severe man, taking what I did not deposit and reaping what I did not sow? 23 Why then did you not put my money in the bank, and at my coming I might have collected it with interest?’ 24 And he said to those who stood by, ‘Take the mina from him, and give it to the one who has the ten minas.’ 25 And they said to him, ‘Lord, he has ten minas!’ 26 ‘I tell you that to everyone who has, more will be given, but from the one who has not, even what he has will be taken away.
During biblical times, currencies were typically made from precious metals and other valuable material that maintained value. Banks also could not “print” money the way it is done today. Therefore, when interest was earned in a bank account from the bankers lending the funds into the community, the depositors could gain a real return. They didn’t have to worry as much about keeping up with inflation. However, the return was still very small compared to the other servants who invested the resources themselves according to their abilities.
Inflation (the increase in money supply compared to goods and services produced) did exist even in biblical times, however. The edges of a coin would be clipped off and melted down to form other coins. The original coins would get lighter and therefore less valuable. This led to the idea of putting grooves on the sides of coins to easily determine if the edges had been clipped. There was also an issue of using less valuable metal to mix with the coinage metals making each coin less valuable. This is why the U.S. coins are no longer made of silver. It is a strategy to inflate the currency.
Side Note: Why would a central government want to inflate the money supply? Because the banks, that are linked to the federal government, flourish on inflation.
Excerpt from A History of Money & Banking in the United States: Colonial Era to WWII by Murray Rothbard:
Pg. 76 — …every time there was a banking crisis brought on by inflationary expansion (of the paper bank notes) and demands for redemption in specie (gold or silver), state and federal governments looked the other way and permitted general suspension of specie payments while bank operations continued to flourish. It thus became clear to the banks that in a general crisis they would not be required to meet the ordinary obligations of contract law or of respect for property rights, so their inflationary expansion was permanently encouraged by this massive failure of government to fulfill its obligation to enforce contracts and defend the rights of property.
Pg. 90 — In the dramatic summing up of the hard-money economist and historian William Gouge, by its precipitous and dramatic contraction “the Bank was saved, and the people were ruined.”
So, whatever interest is earned in bank accounts, inflation is typically more than interest earned, meaning we are losing value over time. We may be in a worse situation than this servant in Jesus’s parable who kept it hidden; the money he had at least maintained its purchasing power.
It seems we really just want a safe place to store the value of our lives and an easy & convenient place to access money for our needs. As I have mentioned in other posts, MONEY IS NOT A STORAGE OF VALUE/WEALTH; it is ONLY a tool to transfer value/wealth to someone else. We typically try to “store” our wealth through bank accounts, but they too are only a money substitute that is designed for transactions, not storage. They are ONLY meant to keep some funds available for convenient access. We should determine how much we realistically need to be stored here, then use other simple and safe solutions to store value for life’s needs.
But where?
SAFETY
- NO STOCK MARKET RISK
- GUARANTEED CASH VALUE
- GUARANTEED DEATH BENEFIT
- GUARANTEED LIFETIME INCOME (optional)
- CREDITOR PROTECTION (varies by state)
- PRIVATELY OWNED CONTRACT
- LONG HISTORY OF SUCCESS (100+ years)
TAXES
- TAX DEFERRED GROWTH
- TAX FREE DISTRIBUTIONS ( if done correctly)
- INCOME TAX FREE TRANSFER TO BENEFICIARIES
- ESTATE TAX FREE
YIELD
- GUARANTEED INTEREST
- CONSISTENT DIVIDENDS (not guaranteed)
- ACCESSIBLE TO INVEST ELSEWHERE
LEGACY
- PRIVATELY TRANSFERRABLE
- TEACHABLE
- ENCOURAGES RESPONSIBILITY
- MULTI-GENERATIONAL WEALTH
EFFICIENCY
- DISTRIBUTIONS AVAILABLE ANYTIME WITHOUT PENALTY
- MULTI PURPOSE SAVINGS
- NO INCOME LIMITS (high or low)
- CUSTOMIZABLE
- EXPANDABLE
Bank accounts have very few of the benefits we actually desire in a savings tool.
The one place where ALL of the above characteristics can be found is through a mutually owned whole life insurance contract structured to focus on building cash value rather than only death benefit. This strategy is a way to take over the “banking” function of your own life to keep the interest and fees you would normally pay to make someone else wealthy (either interest paid, or interest missed out on).
I encourage anyone to discover for themselves the power of the Infinite Banking Concept as discovered, implemented, and taught for many decades by R. Nelson Nash. He eventually wrote a book titled Becoming Your Own Banker: Unlock the Infinite Banking Concept. This 92-page book may be the most valuable book about personal finances other than the Bible. It is the Truth about money and finances, as well as, the solution for anyone’s personal financial freedom. His second book is a great addition, titled Building your Wearhouse of Wealth. These capabilities have been available for people to utilize for centuries. It was created by like-minded people contracting together for mutual benefit.
Could you imagine the benefits of individuals owning their own personal banking system, rather than some other organization?
This is the right way to Save.
